SOMERFIELD

Background

Supermarket group, Somerfield plc, acquired Kwik Save, a discount grocery retailer with small to medium-sized high street stores, in a £473 million transaction in 1998. Somerfield’s investors owned 62.5% of the enlarged group and it was their intention to rebrand the 350 Kwik Save stores under its Somerfield fascia.

Somerfield’s management quickly realised that the fixtures and layouts of the Kwik Save stores, featuring warehouse-style wooden shelving, space-saving small checkouts and narrow aisles, would not fit with their brand. Consequently, Somerfield decided to retain and fully refurbish the 102 best stores while the remaining 248 were identified for closure.

Hilco Capital’s role

• Engaged by Somerfield to advise on planning and execution of a profitable store closure process
• Subsequently appointed to work with Somerfield’s management to manage the process
• Investment vehicle, BTTF, approached Somerfield to acquire 171 of the stores earmarked for closure
• Somerfield and BTTF jointly engaged Hilco to manage the transition of purchased stores to BTTF
• Managed all operational areas of Kwik Save business during transition
• Designed and implemented operational systems for store administration, HR, stock control, IT and finance
• Managed sales performance of stores during process

Results

• Flexible and responsive approach enabled Somerfield to quickly respond to BTTF’s offer and adapt plans accordingly
• Operational processes ensured continuous trade in Kwik Save stores throughout transition process
• Allowed BTTF to focus solely on planning future strategy and supply chain for Kwik Save without distractions
• Avoided loss of customer loyalty for BTTF through discontinuity of trade
• Enhanced cash flow for BTTF
• Maximised recoveries for Somerfield in 77 closure stores while freeing up management to focus on core business and 102 go-forward stores